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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IN MILLIONS)
ASSETS
JANUARY 29, 1999 FEBRUARY 1, 1998 Current assets: Cash $ 520 $ 320 Marketable securities 2,661 1,524 Accounts receivable, net 2,094 1,486 Inventories 273 233 Other 791 349 -------- -------- Total current assets 6,339 3,912 Property, plant and equipment, net 523 342 Other 15 14 -------- -------- Total assets $6,877 $4,268
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,397 $1,643 Accrued and other 1,298 1,054 -------- -------- Total current liabilities 3,695 2,697 Long-term debt 512 17 Other 349 261 Commitments and contingent liabilities --- --- -------- -------- Total liabilities 4,556 2,975 -------- -------- Stockholders' equity: Preferred stock and capital in excess of $.01 par value; shares issued and outstanding: none --- --- Common stock and capital in excess of $.01 par value; shares issued and outstanding: 2,543 and 2,575, respectively 1,781 747 Retained earnings 606 607 Other (66) (61) -------- -------- Total stockholders' equity 2,321 1,293 -------- -------- Total liabilities and stockholders’ equity $6,877 $4,268
DELL COMPUTER CORPORATION CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS)
FISCAL YEAR ENDED JANUARY 29, 1999 FEBRUARY 1, 1998 Net revenue $18,243 $12,327 Cost of revenue 14,137 9,605 ---------- --------- Gross margin 4,106 2,722 ---------- --------- Operating expenses: Selling, general and administrative 1,788 1,202 Research, development and engineering 272 204 ---------- --------- Total operating expenses 2,060 1,406 ---------- --------- Operating income 2,046 1,316 Financing and other 38 52 ---------- --------- Income before income taxes and extraordinary loss 2,084 1,368 Provision for income taxes 624 424 ---------- --------- Income before extraordinary loss 1,460 944 Extraordinary loss, net of taxes ---- ---- ---------- --------- Net income $ 1,460 $ 944 Basic earnings per common share (in whole dollars): Income before extraordinary loss $ 0.58 $ 0.36 Extraordinary loss, net of taxes ----- ----- ---------- --------- Earnings per common share $ 0.58 $ 0.36 Diluted earnings per common share (in whole dollars): $ 0.53 $ 0.32 Weighted average shares outstanding: Basic 2,531 2,631 Diluted 2,772 2,952
DELL COMPUTER CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
(IN MILLIONS)
FISCAL YEAR ENDED JANUARY 29, 1999 FEBRUARY 1, 1998
Cash flows from operating activities: Net income $ 1,460 $ 944 Adjustments to reconcile net income to net cash provided
by operating activities: Depreciation and amortization 103 67
Tax benefits of employee stock plans 444 164 Other 11 24
Changes in: Operating working capital 367 365
Non-current assets and liabilities 51 28 --------- -------- Net cash provided by operating activities 2,436 1,592 --------- --------
Cash flows from investing activities: Marketable securities: Purchases (16,459) (12,305) Maturities and sales 15,341 12,017
Capital expenditures (296) (187) ---------- -------- Net cash used in investing activities (1,414) (475) ---------- --------
Cash flows from financing activities: Purchase of common stock (1,518) (1,023) Issuance of common stock under employee plans 212 88 Proceeds from issuance of long-term debt, net of issuance costs 494 ---- Cash received from sale of equity options and other ---- 37
---------- -------- Net cash used in financing activities (812) (898) ---------- --------
Effect of exchange rate changes on cash (10) (14) ---------- --------
Net increase in cash 200 205 Cash at beginning of period 320 115
. ---------- -------- Cash at end of period $ 520 $ 320
How Parts of the Financial Statements Fit TogetherThe Balance Sheet
Assets– Liabilities= Shareholders' Equity
Income StatementNet Revenue
– Cost of Goods Sold= Gross MarginOperating Expenses= Operating Income before Taxes (EBIT)Interest Expense= Income Before TaxesIncome Taxes= Income After Tax and before Extraordinary Items+ Extraordinary Items= Net Income Preferred Dividends= Net Income Available to Common
Cash Flow Statement (and the Articulation of the Balance Sheet and Cash Flow Statement)
Cash Flow from Operations+ Cash Flow from Investing+ Cash Flow from Financing= Change in Cash
Statement of Shareholders' Equity (and the Articulation of the Balance Sheet and Income Statement)
DividendsNet Income
+ Share RepurchasesBeginning Equity + Other Comprehensive Income = Total Payout
+ Comprehensive Income = Comprehensive Income Share Issues
Net Payout to Shareholders = Net Payout= Ending Equity
• Identify comparable firms that have similar operations to the firm whose value is in question
• Identify measures for the comparable firms in their financial statements – earnings, book value, sales, cash flow – and calculate multiples of those measures at which the firms trade
• Apply these multiples to the corresponding measures for the target firm to get that firm’s value
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IN MILLIONS)
ASSETS
JANUARY 29, 1999 FEBRUARY 1, 1998 Current assets: Cash $ 520 $ 320 Marketable securities 2,661 1,524 Accounts receivable, net 2,094 1,486 Inventories 273 233 Other 791 349 -------- -------- Total current assets 6,339 3,912 Property, plant and equipment, net 523 342 Other 15 14 -------- -------- Total assets $6,877 $4,268
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,397 $1,643 Accrued and other 1,298 1,054 -------- -------- Total current liabilities 3,695 2,697 Long-term debt 512 17 Other 349 261 Commitments and contingent liabilities --- --- -------- -------- Total liabilities 4,556 2,975 -------- -------- Stockholders' equity: Preferred stock and capital in excess of $.01 par value; shares issued and outstanding: none --- --- Common stock and capital in excess of $.01 par value; shares issued and outstanding: 2,543 and 2,575, respectively 1,781 747 Retained earnings 606 607 Other (66) (61) -------- -------- Total stockholders' equity 2,321 1,293 -------- -------- Total liabilities and stockholders’ equity $6,877 $4,268